Neutral IOCL; target of Rs 135: Motilal Oswal

What happened

Motilal Oswal kept its rating on IOCL at Neutral and set a target price of Rs 135. IOCL reported EBITDA of INR303b and profit after tax of INR216b, both above the firm's estimates. Better-than-estimated marketing performance drove the earnings beat.

Confirmed

Global impact / market context

The report points to marketing performance as the main reason earnings exceeded estimates, while LPG under-recovery costs remained substantial. If marketing results stay stronger, they can support profits; changes in these costs or refining results could alter the earnings outlook and the case for the target price.

Analyst inference

Motilal Oswal’s Neutral view contrasts strong reported earnings with a valuation based on expected earnings and the value of investments. Its Rs 135 target reflects the broker’s valuation assumptions, rather than a guaranteed trading price; the article does not establish how investors or the share price will respond.

Analyst inference

What to watch

1. Check whether IOCL's next reported marketing margins remain stronger than Motilal Oswal expected; the report cites marketing performance as the main driver of the earnings beat. Analyst inference
2. Track LPG under-recovery amounts in later results, since the report says INR64b was booked in 2Q after INR102b in 1Q. Confirmed
3. Compare future refining results with the report's estimate: its GRM, a measure of refining profit per barrel, was USD36.7/bbl, close to USD37/bbl expected. Analyst inference

Evidence

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